My home is insured with CA Fair Plan and was destroyed in the Eaton Fire. I am considering selling the lot “as is” but have not yet settled my claim with my insurance company. If I sell the lot how could this affect my insurance settlement?
Mark Sheffer asked 6 days ago 1 Answers
Troy Willis Expert answered 3 days ago Hi Mark,
Selling a lot “as is” before settling your claim with CA Fair Plan could significantly impact your insurance settlement in several ways:
1) Impact on Policy Coverage: Many property insurance policies, including those under CA Fair Plan, require you to have an insurable interest in the property at the time of loss and at the time of settlement. Selling the lot could eliminate your insurable interest, potentially reducing or even voiding parts of your claim.
2) Reduction in Settlement Amount: Your claim may include both structure and land-related components. Since land is not typically insured, selling the lot won’t directly affect payments for the dwelling and personal property. However, certain coverages like debris removal or ordinance & law coverage may be affected if ownership changes.
3) Negotiating Power: Keeping the lot may give you some leverage in negotiating with your insurer. If you sell the lot, CA Fair Plan might argue that they no longer have a need for certain repair/rebuild costs, potentially reducing what they offer.
Therefore, selling the land before settling the claim may introduce several negative factors that could impact the insurance carrier’s settlement payout to you. Before selling, you should consult with a real estate attorney to ensure the sale doesn’t inadvertently waive any rights to their insurance proceeds. Also, you should contact their insurance company or agent to clarify how they would handle the claim if ownership changes.
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